LONDON (Reuters) - EDF Energy on Wednesday became the first major energy supplier to cut gas prices following a drop in underlying wholesale costs due to mild weather and declining economic activity, increasing pressure on rivals to follow suit.
The utility (EDF.PA), which left electricity prices unchanged, will cut gas bills by five percent from February 7 after it had passed on a 15.4 percent increase just two months ago.
“We know customers are finding it difficult, particularly during winter. So I am pleased we have been able to make this announcement now and help our customers at a time they use more gas,” said Martin Lawrence, managing director of customer supply at EDF Energy.
Britain’s ‘Big Six’ energy suppliers (EDF Energy (EDF.PA), RWE npower (RWEG.DE), E.ON (EONGn.DE), Scottish Power (IBE.MC), Centrica (CNA.L) and SSE (SSE.L)) increased tariffs between August and November last year, passing on steep rises in wholesale prices, which helped drive UK inflation rates to a three-year high in September.
EDF Energy said on Wednesday it decided not to cut its electricity tariffs as it had only passed on an inflation-based increase of 4.5 percent in November.
In comparison, the average electricity price increase of its rivals was more than double.
Since then, British wholesale electricity and gas prices have fallen around 10 percent since the autumn, when suppliers last raised consumer bills, as above-normal temperatures and the weakening economy have weighed on gas and power consumption.
“Centrica and SSE will have to follow suit (because) gas prices have fallen considerably,” said Dominic Nash, analyst at Liberum Capital.
“It was only a matter of time before somebody cut prices and it will be probably fairly soon that both SSE and Centrica will follow suit.”
So far, only two smaller energy suppliers, Co-operative Energy and Ovo Energy, have dropped electricity and gas prices by three and five percent, respectively.
Consumer lobby group Consumer Focus called on other suppliers to also cut prices and to adjust retail tariffs to market fundamentals.
“The cut is not enormous given the scale of increases last year but it creates some important momentum in the market,” said Adam Scorer, director of policy at Consumer Focus.
Also on Wednesday, consumer lobby group Which said that Britain’s big six utilities had received four million complaints last year, with tens of thousands remaining unresolved after eight weeks.
Which also said that 40 percent of customers have had a problem with a gas and electricity company in the last two years. Common problems included inaccurate metering and missing bills.
Additional reporting by Adveith Nair; editing by Jason Neely